Demystifying the role of risk tolerance, economic hardship and financial literacy on microentrepreneurs’ financial capability

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F70883521%3A28120%2F25%3A63592718" target="_blank" >RIV/70883521:28120/25:63592718 - isvavai.cz</a>

Result on the web

<a href="https://www.emerald.com/msar/article/doi/10.1108/MSAR-02-2025-0075/1329957/Demystifying-the-role-of-risk-tolerance-economic" target="_blank" >https://www.emerald.com/msar/article/doi/10.1108/MSAR-02-2025-0075/1329957/Demystifying-the-role-of-risk-tolerance-economic</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1108/MSAR-02-2025-0075" target="_blank" >10.1108/MSAR-02-2025-0075</a>

Result language

angličtina

Original language name

Demystifying the role of risk tolerance, economic hardship and financial literacy on microentrepreneurs’ financial capability

Original language description

Purpose – The aim of the study is twofold. Firstly, the study aims to examine the impact of economic hardship and risk tolerance on entrepreneurs’ financial capability, an area of the entrepreneurial ecosystem that has received limited research attention. Second, to validate whether the elements of financial literacy – such as financial behaviour, financial knowledge and financial attitude – moderate these relationships.Design/methodology/approach – A quantitative research design using structural equation modelling was employed to analyse the data collected from 311 microentrepreneurs through a structured questionnaire. Additionally, the study complements the findings by performing necessary condition analysis (NCA) to examine economic hardship and risk tolerance as predictors of financial capability.Findings – The findings revealed that economic hardship has a significant influence on financial capability, whereas risk tolerance does not. Individuals facing economic hardship often develop coping mechanisms that may force people to become more financially capable in terms of money management. Furthermore, the study found no moderating effect of financial literacy constructs on the relationship between the independent variables and financial capability. NCA results confirm that economic hardship and risk tolerance are moderately necessary for developing financial capability among microentrepreneurs.Practical implications – The results highlight the importance of addressing microentrepreneurs’ economic hardships. Enhancing financial literacy through interventions may not necessarily improve financial capability. The study intends to give policymakers and practitioners insights into establishing effective financial planning education and training programmes, specifically on coping with and preparing for economic hardships to sustain during economic hardship.Originality/value – This study highlights the relevance of economic hardship as a key component of financial capability. To tackle economic hardship, skills and support are more relevant than merely stressing the importance of improving financial literacy. It establishes economic hardship as a major external driver of financial capability. It challenges the dominant narrative by showing that financial literacy alone is insufficient to enhance capability. It brings much-needed focus to micro-entrepreneurs, an understudied group. Ultimately, it broadens a direction to reframe policy priorities, shifting attention from financial literacy to economic resilience and support for survival.

Czech name

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Czech description

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Type

J_SC - Article in a specialist periodical, which is included in the SCOPUS database

CEP classification

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OECD FORD branch

50206 - Finance

Project

—

Continuities

V - Vyzkumna aktivita podporovana z jinych verejnych zdroju

Publication year

2025

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Management &amp; Sustainability: An Arab Review

ISSN

2752-9819

e-ISSN

2752-9827

Volume of the periodical

2025

Issue of the periodical within the volume

neuveden

Country of publishing house

GB - UNITED KINGDOM

Number of pages

26

Pages from-to

1-26

UT code for WoS article

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EID of the result in the Scopus database

2-s2.0-105025457459